Targacept?s TC-5214 Achieves All Primary and Secondary Outcome Measures in Phase 2b Trial as Augmentation Treatment for Major Depressive Disorder

Winston-Salem, North Carolina, July 15, 2009 -—Targacept,
Inc. (NASDAQ: TRGT) today announced positive top-line results from
a double blind, placebo controlled, flexible dose Phase 2b clinical
trial of TC-5214 as an augmentation (add-on) treatment for major
depressive disorder, or MDD, in subjects who did not respond
adequately to first-line treatment with citalopram alone. The
result on the primary outcome measure for the trial, mean change
between treatment (TC-5214 + citalopram) and placebo (placebo +
citalopram) from baseline on the Hamilton Rating Scale for
Depression-17, or HAM-D, was highly statistically significant in
favor of TC-5214 (p < 0.0001) on an intent to treat basis. The
results on all of the trial’s secondary efficacy measures,
including assessments of depression, irritability, disability,
cognition, severity of illness and global improvement, were also
highly statistically significant in favor of TC-5214 on an intent
to treat basis.

Study Design

The Phase 2b trial of TC-5214 as an augmentation treatment for
MDD was a two-phase study conducted at 20 sites in India and three
sites in the United States. In the first phase, 579 subjects with
MDD received first-line treatment with citalopram hydrobromide for
eight weeks, 20mg daily for the first four weeks and 40mg daily for
the next four weeks. Citalopram, an approved treatment for MDD
marketed in the United States as Celexa®, is from the drug
class known as selective serotonin reuptake inhibitors. At the end
of the eight weeks, subjects whose Montgomery-Asberg Depression
Rating Scale score had improved less than 50 percent and was no
lower than 17 and whose Clinical Global Impression - Severity of
Illness score was no lower than 4 were considered partial or non
responders and randomized into the double blind second phase of the
trial.

In the double blind second phase, subjects continued their
citalopram treatment and also received either add-on TC-5214 or
add-on placebo for an additional eight weeks. The daily dosage of
TC-5214 was initially 2mg and could be increased at the discretion
of the investigator to 4mg and to 8mg based on tolerability and
therapeutic response. The primary outcome measure for the trial was
mean change between treatment (TC-5214 + citalopram) and placebo
(placebo + citalopram) from double blind baseline as measured by
HAM-D at week 16. The intent to treat dataset included 265 subjects
in the second phase.

About TC-5214

It is well known that depressive symptoms can result from an
overstimulation of NNRs and other receptors in the brain that are
activated by the neurotransmitter acetylcholine. Accordingly,
compounds capable of inhibiting the activity of these
overstimulated receptors may be expected to have antidepressant
effects. TC-5214 is a nicotinic channel blocker that has unique
properties in modulating the alpha4beta2 NNR subtype.

About Major Depressive Disorder

MDD is a serious mental illness characterized by one or more
major depressive episodes. According to The National Institute of
Mental Health, or NIMH, MDD is the leading cause of disability in
the United States for people between the ages 15 and 44, and NIMH
estimates that approximately 14.8 million American adults suffer
from MDD.

In 2000, the total economic burden of treating depression in the
United States was approximately $83.1 billion, with workplace
costs, including missed days and lack of productivity due to
illness, accounting for approximately 62% of the total economic

burden, treatment costs accounting for approximately 31% and
suicide-related costs accounting for approximately 7%.

1
The Sequenced Treatment Alternatives to Relieve Depression, or
STAR*D, study undertaken by NIMH between 2001 and 2006 highlighted
the inadequacy of currently available therapies for MDD.
Approximately 63% of participants in the study did not achieve
remission following initial treatment with citalopram alone. The
study showed that augmentation therapies may be useful in the
treatment of symptoms of depression that do not resolve with
first-line treatment.

2
About Targacept

Targacept is a clinical-stage biopharmaceutical company that
discovers and develops NNR Therapeutics™, a new class of
drugs for the treatment of central nervous system diseases and
disorders. Targacept’s product candidates selectively
modulate neuronal nicotinic receptors that serve as key regulators
of the nervous system to promote therapeutic effects and limit
adverse side effects. Targacept has product candidates in
development for major depressive disorder and resistant
hypertension, attention deficit/hyperactivity disorder,
Alzheimer’s disease and cognitive dysfunction in
schizophrenia, as well as multiple preclinical programs. Targacept
also has a cognition-focused collaboration with AstraZeneca and a
strategic alliance with GlaxoSmithKline. Targacept's news releases
are available on its website at www.targacept.com.

Forward-Looking Statements
Statements in this press release that are not purely historical in
nature constitute "forward-looking statements" made under the
provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include, without limitation, statements
regarding future development or commercialization of TC-5214,
including the timing for initiation of Phase 3 clinical
development, a strategic partnership with respect to TC-5214, the
benefits that may be derived from TC-5214, or Targacept’s
plans, expectations or future operations, financial position,
revenues, costs or expenses. Actual results may differ materially
from those expressed or implied by forward-looking statements as a
result of various important factors, including, without limitation,
risks and uncertainties relating to: Targacept’s ability to
establish a strategic alliance, collaboration or licensing or other
arrangement with respect to TC-5214 on favorable terms;
Targacept’s reliance on third parties for the manufacture of
clinical trial material for future development of TC-5214; and the
timing and success of submission, acceptance and approval of
regulatory filings. These and other risks and uncertainties are
described in greater detail under the heading "Risk Factors" in
Targacept’s most recent Annual Report on Form 10-K and in
other filings that it makes with the Securities and Exchange
Commission. As a result of the risks and uncertainties, the results
or events indicated by

1

Michaud, McKenna, Begg, et al. The burden of disease and injury
in the United States 1996. Population Health Metrics. 2006;
4:11.
2

Rush, Trivedi, Wisniewski, et al. Acute and Longer-Term Outcomes
in Depressed Outpatients Requiring One or Several Treatment Steps:
A STAR*D Report. American Journal of Psychiatry. November 2006;
163:1905-1917.
the forward-looking statements may not occur. Targacept cautions
you not to place undue reliance on any forward-looking statement.
In addition, any forward-looking statement in this press release
represents Targacept’s views only as of the date of this
press release and should not be relied upon as representing its
views as of any subsequent date. Targacept disclaims any obligation
to update any forward-looking statement, except as required by
applicable law. NNR Therapeutics (TM) is a trademark of Targacept,
Inc. Any other service marks, trademarks and trade names appearing
in this press release are the properties of their respective
owners.

"The magnitude and consistency of the effect of TC-5214 seen in
this trial could represent a major breakthrough for patients with
depression," said Dr. Madhukar H. Trivedi, Professor and the
Director of the Mood Disorders Research Program and Clinic at the
University of Texas Southwestern Medical Center at Dallas, one of
the principal investigators for the trial and Co-Principal
Investigator in the National Institute of Mental Health’s
large-scale STAR*D study. "It is particularly compelling that the
superiority of TC-5214 as augmentation to citalopram over
citalopram alone was first seen after only two weeks and grew
steadily over the trial’s last six weeks, culminating in
remission for twice as many subjects in the TC-5214 group."

TC-5214 exhibited a favorable tolerability profile in the trial.
The most frequent adverse events were headache, dizziness and
constipation. There was no clinically significant difference
between the dose groups in discontinuations due to adverse events.
There was one serious adverse event in the trial considered by the
investigators to be related to study drug (citalopram and/or
TC-5214), a seizure experienced by a study subject.

"The strong results from this Phase 2b augmentation trial
support the potential of TC-5214 to provide much needed help for
the millions of depressed patients who do not respond adequately to
currently available therapies," said Geoffrey C. Dunbar, M.D.,
Targacept’s Vice President, Clinical Development and
Regulatory Affairs. "This is the second time our clinical trials
have shown antidepressant effects of this NNR mechanism. We are
particularly enthusiastic about the finding in this study on
irritability, which is a core symptom of MDD that is often
difficult to treat."

Next Steps

Targacept plans to present detailed results from the Phase 2b trial
of TC-5214 at the Society for Neuroscience meeting scheduled for
October 2009 in Chicago, Illinois.

Targacept is active in discussions with multiple pharmaceutical
companies with the goal of identifying a strategic partner to
assist in the global development and planned commercialization of
TC-5214. Targacept expects Phase 3 clinical development to be
initiated in the second quarter of 2010, following planned
discussions with FDA
and production of clinical trial material.

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